How do the FHSA, RRSP Home Buyers' Plan and TFSA compare for a down payment?
If you qualify as a first-time buyer, start with the FHSA. You can put in $8,000 a year, deduct it from your income, and withdraw it tax-free for a first home. The RRSP Home Buyers' Plan lets you take out up to $60,000 and repay it over time. A TFSA (2026 limit $7,000) is the most flexible, with no deduction.
What is the FHSA and how much can you put in?
The First Home Savings Account (FHSA) is a registered account built for a first home. To open one you must be at least 18 (19 where that is the age to sign a contract), no older than 71 on December 31 of the year, a Canadian resident, and a first-time buyer.
The CRA's test for first-time buyer is that you did not live in a home you owned, or your spouse or common-law partner owned, in the current calendar year before you opened the account or in the 4 calendar years before that.
Your room is $8,000 in the year you open the account. Unused room carries forward up to $8,000, so the most you can put in during one year is $16,000. The lifetime limit is $40,000, which is 5 years at $8,000.
Contributions are deductible. If you skip the deduction in a year, you can claim it later, and the unclaimed amount carries forward even after the account is closed. Transfers from your RRSP into an FHSA are not deductible.
When is an FHSA withdrawal tax-free?
A qualifying withdrawal, including the investment growth, is tax-free. You need all of these:
A written agreement to buy or build a qualifying home, with the closing or completion date before October 1 of the year after the withdrawal.
The intention to live in the home as your principal residence within 1 year of buying or building it.
First-time buyer status at the time of withdrawal, using the same 4-year test.
Canadian residency from your first qualifying withdrawal until you buy.
A withdrawal that misses any of these is added to your income for the year. After your first qualifying withdrawal, close all your FHSAs by December 31 of the following year.
The account also has an end date. Your participation period ends on December 31 of the year of the 15th anniversary of opening your first FHSA, or the year you turn 71, whichever comes first.
How does the RRSP Home Buyers' Plan work?
The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP to buy or build a first home. You do not report the withdrawal as income, and your RRSP issuer does not withhold tax on $60,000 or less.
The first-time buyer test is the same 4-year rule, with a 30-day exception before the withdrawal. You must intend to live in the home within 1 year of buying or building it.
You repay the money to your RRSP over up to 15 years. For first withdrawals made between January 1, 2026 and December 31, 2028, repayment starts in the fifth year after the year of your first withdrawal. A 2026 withdrawal means your first repayment is in 2031.
If you repay less than the required minimum in a year, the shortfall is added to your income for that year. RRSP contributions made in the 89 days before the withdrawal may not be deductible, so plan the timing.
How does a TFSA work for a down payment?
The Tax-Free Savings Account has no home-buying rules. Contribution room starts building at age 18, and the 2026 limit is $7,000. Withdrawals are not taxed, and you can spend the money on anything.
The catch is timing. A withdrawal is added back to your contribution room on January 1 of the next calendar year. If you put the money back in the same year and you don't have enough room, the over-contribution is taxed at 1% a month.
Which one should you use first?
My read: for most first-time buyers the order is FHSA, then HBP, then TFSA.
FHSA first. It is the only one of the three where you get a deduction going in, pay no tax coming out, and have nothing to repay.
HBP second, if you already have RRSP savings. It allows the largest amount, up to $60,000. You have to repay it on a schedule, and the 89-day rule affects new contributions.
TFSA for flexibility. It has no deduction, but you can use it if the FHSA's closing-date and occupancy rules don't fit your plans.
The FHSA and the HBP can be used for the same home. If you have both, you can withdraw from each, as long as you meet the conditions of each at the time you withdraw.
Here is how the three look side by side.
A down payment account only covers part of the cost. For the rest, see closing costs a first-time buyer should budget for and the BC property transfer tax exemption. To see what income a lender wants, read how much you need to earn to buy a condo in Metro Vancouver.
I'm Barton Lui, a REALTOR® with Real Broker. I'm not an accountant, so ask yours how the deductions fit your tax situation. I can help you work out how much you'll need to have saved by the time you write an offer.
Frequently asked questions
Can I use an FHSA and the Home Buyers' Plan together?
Yes, for the same home. The CRA says you can withdraw from your RRSP under the HBP and make a qualifying withdrawal from your FHSA, as long as you meet the conditions of each at the time of each withdrawal.
How much can I put in an FHSA each year?
$8,000 a year, plus up to $8,000 of unused room carried forward, so a maximum of $16,000 in one year. The lifetime limit is $40,000.
Do I have to repay the Home Buyers' Plan?
Yes. You repay your RRSP over up to 15 years. For first withdrawals between 2026 and 2028, repayment starts in the fifth year after the year of the first withdrawal. Missed minimum repayments are added to your income.
What is the TFSA limit for 2026?
$7,000. Withdrawals are not taxed, and the withdrawn amount returns to your contribution room on January 1 of the next calendar year.
Barton Lui is a REALTOR® with Real Broker in Vancouver. He works mostly with first-time buyers across Metro Vancouver and speaks English, Cantonese and Mandarin.
Planning your down payment? Book a consultation.
Reach him at 604-715-5568 or barton@bartonrealtor.com.
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